BrewDog's fight against big brand beer monotony

On Scotland’s North East coast, a craft beer startup is trying to brew a revolution. “The idea to start our own brewery certainly wasn’t something we consciously set out to do,” says James Watt, who founded BrewDog along with his school pal Martin Dickie. It all began when the two were discussing beer monotony (“the stuffy ales and fizzy yellow lagers”) and how often supermarket and big brand beers taste the same.

Dickie had just finished a degree in brewing so the duo decided to try and create their own beer. The goal was to make something a class apart from “the stuffy ales and fizzy yellow lagers” that dominate the UK market. Watt: “I guess like any good idea it just had this natural flow about it that just kept rolling and has never really stopped.”

Dickie (left) and Watt.

A makeshift brewery
After their discussion, the pair set up a “sketchy” makeshift brewery in Dickie’s garage and created the first batch of what is now known as Punk IPA. They took the pilot beer to a series of open tastings and were discovered by beer guru Michael Jackson (“The Beer Hunter,” not “The King of Pop”) at an event in Glasgow. Upon tasting the beer, he told them to quit their jobs and go into brewing fulltime. And that’s exactly what they did.
Both were only 24-years-old at the time, the pair took the plunge and leased a building. Watt: “We somehow managed to scrape together £10,000 of personal savings between us along with a £30,000 bank loan which we lied to get. We found that turning up at the bank wearing a suit whilst pointing at a series of useless numbers on a spreadsheet is the best way to get a business loan.”

The beginning stages involved a lot of long hours. “The first year involved living, eating and sleeping at the brewery — a drafty warehouse on Fraserburgh’s coastline,” says Watt. “Exposed to the elements and running short on funds, Martin and I often worked 20 hour shifts, both to stay afloat but also to stay warm.”
Within a year, a buzz began to form around their beers. Some people attacked their “reckless and irresponsible” approach to brewing. Others saw their beers as wildly innovative and providing a much-needed shakeup to the outmoded classic beer world. “Many people are still making their mind up over which brush to tar us with,” explains Watt.

Scaling up
The rocketing demand meant the company had to deal with scaling issues — specifically: maintaing quality control while brewing more beer. “We are all about the beer quality, not about how much beer we make,” says Watt. “We live and die by what is in the bottle and what is in people’s glass. We want to ensure every single beer that leaves our brewery is a true reflection of our beer philosophy and the beer we can make it. To have this much control is just not possible when you scale up too fast.”

Watt’s advice to other starters
Find something you are passionate about and have an almost unrealistic level of confidence in your own ability. Starting a small company you get so many doubters, so many kicks, so many knocks and so many set backs. Only passion and belief gets you through these times.

On a realistic level though, you also have to have a some kind of business sense. Check out the competition and if you can’t identify other businesses doing what you’re doing, it’s maybe worthwhile considering whether a marketplace actually exists.

So even though the company was profitable and turning over £1.8m (around $2.8m), it reevaluated its plans. Watt explains, “We needed to completely reinvisage the way we financed our company in order to hire talented staffers and boost the amount of beer we were able to produce whilst ensuring we still sourced the best, rarest, and most obscure ingredients.” In the midst of 2009’s post-recession climate, BrewDog opted for a completely alternative business model called “Equity for Punks.”

“Equity for Punks turned the concept of business ownership on its head,” according to Watt. “Despite having run the business for just two years, we took the unprecedented step to become a PLC. Then we offered the public the opportunity to buy shares (just under 5% of the company) in BrewDog. We managed to raise over £700,000 in extra funds as a means to growing BrewDog even further. Over 1,300 people bought into BrewDog’s vision of a craft beer future that offered people more choice.”

Now the company exports 700,000 bottles per month to over 27 countries worldwide. 2010 revenue was £3.5m with profits of £300k. There are 65 staffers and locations include a brewery, three bars, and a restaurant.

Barely keeping up
The atmosphere may be punk, but there’s still plenty of anxiety. “I’d be lying if I said that working at BrewDog was one big frat party in a brewery or a bed of roses,” says Watt. “In reality, it’s a theatre of war that’s stressful and highly pressurized. The business is growing so quickly that we can often barely keep up in terms of the number of people we need as well as the internal procedure and infrastructure that are key to keeping the whole thing from falling down around us. We spend a lot of time putting out fires, whether that’s explaining to a loyal customer that their beer isn’t ready yet or trying to get our online store fully stocked.”

The hand crafted nature of the beer is part of the problem. “It’s a completely organic product that takes time to grow and mature,” explains Watt. “If we were an automated, machine-driven multinational with millions of pounds at our disposal then we could quite happily pump our beers full of artificial flavourings and chemicals to get them out the door as quickly as possible. Thankfully, however, that’s not the way we operate.”

So what’s the end goal for BrewDog? “For us, everything comes back to one simple thing: to make other people as passionate about great craft beer as we are,” says Watt. “We want to show people there is an alternative to monotone corporate beers and introduce them to a completely new approach to beer. We are on a mission to open as many people’s eyes as possible. This single goal is what gets us through pretty much anything.

“That means wrangling with industry regulators, pushing the boundaries in high ABV brewing, smashing bottles of generic beer with a baseball bat, or doing a Saturday morning tasting at a local street market. We also have something of a reputation for our PR stunts that include everything from packaging beer in stuffed stoats, dressing dogs in sailor suits, brewing the world’s strongest beer (it contains 55% alcohol and costs $765) , and purposely trying to get our own beers banned.” The company is also behind BeerLeaks, a website developed to “dispel the smoke and mirrors that surrounds the UK beer industry – exposing the myths perpetuated through the advertising and propaganda of mainstream breweries.”

Many big breweries do not like to mention that their use of animal and fish products as agents in the brewing process means their beers are not suitable for vegetarians. Tennent’s and Fosters make it clear on their websites, but not their packaging or advertising, whereas other offenders suggest using Isinglass (a fish product) does not warrant saying it’s not suitable for veggies.

Think you are drinking a Spanish Beer when you are sipping on a can of San Miguel? Think you are enjoying something authentically Belgian when subjecting yourself to Stella Artois? Believe that Asahi Dry provides a genuine taste of the orient? It’s just not true. In reality, all you are sampling is a marketing myth. Despite the packaging and marketing claiming they are from exotic locations, these beers are all brewed right here in the UK – by people who don’t really care.

Overcoming suspicions
It’s all part of BrewDog’s biggest challenge: convincing customers to take a chance. Watt says, “Craft beer can often feel like your rowing upstream. Not a day goes by in one of our bars where we get a patron asking ‘Why don’t you serve Stella?’ or ‘Where’s the Corona?’ The majority of people are conditioned to gravitate towards huge brands they recognize or order a beer simply because it’s what their friends drink or what they’ve grown up to see as the ‘safe choice.’

“In this way, it regularly feels like we’re going against the grain in trying to produce something that most people will initially be suspicious about trying. For example, we once did a meet and greet at a supermarket where shoppers had the opportunity to sample small amounts of the beer and chat to the brewers. A number of shoppers wouldn’t try our fruity ale Trashy Blonde for fear they may be judged for drinking a beer that had a purple label. Sometimes it’s just bizarre. I believe it’s our job to take their opinions, challenge them and give them a realistic alternative to mainstream beer to the point where they can make an informed choice about what they drink and why.”

Ken

on 09 Jun 11

@37signals

More and more blog posts in the past few months just seem random … like this post.

What topic area does this blog post fall under for 37svn?

“This is Signal vs. Noise, a weblog by 37signals about design, business, experience, simplicity, the web, culture, and more. Established 1999 in Chicago. Visit the Product Blog for more information on our products.”

Is it “business”?

MIke

on 09 Jun 11

@Ken

37signals covering a company that goes against conventional wisdom to create an innovative product and is successful at it? I don’t get it either.

Try relaxing with a beer.

Joe W

on 09 Jun 11

@ Ken:

BrewDog are exactly what 37signals should be writing about. They take a stance, against the accepted wisdom, and fight for it.

In fact, when I applied for a post at 37s, I said they and BrewDog were the two companies I’d want to work at above all others.

I didn’t realise SVN was in the business of regurgitating press releases. BrewDog’s business is built on bullshit, hype and negative campaigning. That’s why most people in the drinks industry in Scotland despise them. What a shame SVN has been taken in by this bunch of chancers.

Bill

on 09 Jun 11

@Ken
It’s a post about a company that has gone from two man start up to a publicly quoted company with a £3.5M ($5.7M) turnover controlled by the original founders, who are both still in their 20s. Furthermore it has done so by selling aggressively niche products via the largest mass market retailers.

...er yes, I’d say it was business.

such as Tescos (30% of the UK grocery market), Asda (17%), Sainsburys (~16.5%)

Bill

on 09 Jun 11

(memo to self) Don’t try and do a footnote, an asterisk switches on bold.

Anonymous Coward

Oh, Signals, forgot to mention: Check out the Aussie take on this -> http://www.broo.com.au/.

You could access shares based on how many slabs you bought.

Truly an Aussie way of marketing. “Buy more beers, get more shares”.

Tim

David Andersen

on 10 Jun 11

Some people attacked their “reckless and irresponsible” approach to brewing.

Is it possible to be reckless and irresponsible while brewing beer? Nuclear fission, sure. Beer brewing, I don’t think so.

Owen Bell

on 10 Jun 11

Equity for Punks turned the concept of business ownership on its head

Owen Bell

on 10 Jun 11

Equity for Punks turned the concept of business ownership on its head

Yes, they managed to convince people to value their two year old company turning over a few million at £14,000,000.

Brewdog are full of the proverbial, and Beerleaks is a mish-mash of half truths and misleading factoids ( http://bit.ly/l1ZFQ3 among others ). James even goes as far as to distance Brewdog from it here : http://www.brewdog.com/blog-article/brewdog-camden and claims that it’s about exposing corporate brewing’s shady practices, while it fails to name the hundreds of “craft” breweries who also use isinglass (and are more likely to that industrial brewers, who use centrifuges and filtration in the main).

Also, the only place “reckless and irresponsible” appears on the net in conjunction with Brewdog is in this article. The quotation marks therefore seem to be misplaced; you can guarantee that if it had actually happened there’d be mention of it elsewhere on the web.

Bob

on 10 Jun 11

I agree with @Barm above. This reads like a regurgitated press release. Plus: I am the only one who thinks it is wrong that they admit to lying to get a £30,000 bank loan? Doesn’t impress me either as a potential customer or as somebody looking for inspiration from their story. If they lied about that, what else do they lie about? And if they didn’t lie, why would they say they did?

Harvey

on 10 Jun 11

@Bob

I couldn’t agree more.

The post reads like a poor constructed press release and reeks of unethical practices.

Barm

on 10 Jun 11

Bob: it is a recycled press release. I know because I have read it several times before.

I guess BrewDog’s London PR agency Manifest is trying to place the story in the foreign press and web media as much as possible, since the number of serious beer bars in the UK still willing to do business with them is declining.

Two of these commenters are Scottish guys that really hate us because we have been successful and gone against the traditional beer culture in Scotland which they represent. They seem to make it their mission to post false and hateful comments all over the internet whenever a article about BrewDog is posted (including on our own blog).

Why? If you strive to do anything different or interesting and are successful, a small percentage of people will always be jealous of you and want to undermine the success. F#ck ‘em. There are no statues erected to criticsm.

Re: their comments…

1) “Beerleaks is a mish-mash of half truths and misleading factoids ( http://bit.ly/l1ZFQ3 among others ). James even goes as far as to distance Brewdog from it here : http://www.brewdog.com/blog-article/brewdog-camden and claims that it’s about exposing corporate brewing’s shady practices, while it fails to name the hundreds of “craft” breweries who also use isinglass (and are more likely to that industrial brewers, who use centrifuges and filtration in the main).”

I did not distance ourselves from this, I merely explained it. The point about centrifuges is written by someone with no brewing knowledge. The worlds best craft brewers now have centrifuges, brewers such as Stone, Russian River and Lagunitas but they use them in an entirely different way to the industrial brewers.

2) “Also, the only place ‘reckless and irresponsible’ appears on the net in conjunction with Brewdog is in this article. The quotation marks therefore seem to be misplaced; you can guarantee that if it had actually happened there’d be mention of it elsewhere on the web.”

We have constantly been labelled reckless and irresponsible in the media for our high strength beers.

3) “the number of serious beer bars in the UK still willing to do business with them is declining.”

We have much more demand in the UK than we can keep up with. Existing customers are healthily increasing volumes and are are adding plenty of new ones too. We are now in over 350 UK on premise accounts.

No James, we don’t “hate you because you’re successful and go against tradition.” What we object to is the way you go about insulting and denigrating every other UK brewer. How about importing some of the goodwill and camaraderie from the US craft brewers you admire?

Good post on the blog today by the way, I don’t agree with it all but it’s much more interesting than the scurrilous pot-shots at CAMRA.

This discussion is closed.

About Matt Linderman

Now: The creator of Vooza, "the Spinal Tap of startups." Previously: Employee #1 at 37signals and co-author of the books Rework and Getting Real.